Daily market snapshot

Wednesday, 12/10/2025 p.m.

• Markets rally to new record highs after Fed meeting – Equity markets delivered strong gains this afternoon after the Fed cut interest rates, as widely expected, and provided less hawkish signals than the market had seemingly feared around the path for future policy*. The S&P 500 index was up 0.8%, but the biggest gains were seen in small-cap equity markets, with the interest-rate-sensitive Russell 2000 index up close to 2% over the day*. Canadian equities also delivered strong gains, with the S&P/TSX index up 0.8%, even though the Bank of Canada opted to leave interest rates unchanged – as widely expected – arguing that current settings are appropriate*. We also saw a rally in government bond markets after the meeting, bringing the yield on the 10-year U.S. and Canadian bonds between 3-4 basis points (0.03% to 0.04%) lower*. Against this backdrop the U.S. dollar struggled, falling close to 0.5% against a trade-weighted basket of international currencies*. Conversely, lower interest rates helped push gold prices nearly 1% higher over the day*.  
   
• Bank of Canada happy to sit on its hands – At first glance there looks to be relatively few surprises from the Bank of Canada meeting this morning*. Rates were, as widely expected, held unchanged at 2.25%, and in terms of forward guidance, the bank is signaling that current monetary-policy settings look appropriate should the economy evolve as the central bank expects*. There was some acknowledgement that recent data have been a shade better than expected, with Governor Macklem flagging the resilience of activity seen in recent labour-market reports and in third-quarter GDP data*. Moreover, the Bank will be upgrading its growth expectations for coming years based on the recently passed budget that contains a range of measures aimed at boosting Canadian investment rates*. However, amid ongoing trade-policy risks, and with slack still evident in the Canadian economy, the overall message is that the moderately supportive policy setting currently in place remains appropriate given the outlook*. We think the Bank of Canada will hold interest rates steady in 2026.
   
• A divided Fed – As anticipated, the Fed's decision to cut rates today was contested, with two FOMC members (Schmid and Goolsbee) voting in favor of unchanged interest rates, while Miran continued to make the case for even deeper rate cuts*. This is the first time we have seen three dissents against an FOMC decision since 2019, underlining the divisions on the Fed's rate-setting committee around the path for policy*. Subtle changes to the language of the Fed's press statement that accompanied the decision today hinted that the central bank is preparing to take a pause from easing at its January meeting, following three consecutive interest-rate cuts*. Chair Jerome Powell seemed to amplify the signal that the central bank would be on hold, in the short term at least, at his press conference, but hinted that the Fed was likely to ease further by arguing it was unlikely the central bank's next step would be an interest-rate hike*. We think the Fed will cut just once or twice more next year, leaving interest rates in the 3%-3.5% range.
   

James McCann;
Investment Strategy

^{Source: *Bloomberg}

Tuesday, 12/9/2025 p.m.

• Stocks little changed ahead of BoC and Fed meetings – North American equity markets closed near the flatline on Tuesday as investors await the conclusion of the final Bank of Canada and FOMC meetings of the year tomorrow. Market expectations call for the Fed to deliver a 0.25% interest-rate cut at tomorrow’s meeting*, with much of investors’ attention likely focused on updated Fed economic projections and commentary regarding the appropriate path of monetary policy over the coming year. The Bank of Canada is expected to hold its policy rate steady at tomorrow's meeting.* On the economic front, the U.S. NFIB Small Business Index edged higher in November to 99, slightly above expectations for a reading of 98.3.* Additionally, U.S. job openings for October were higher than expected, holding steady near 7.7 million and signaling steady labour demand, in our view.* Bond yields closed slightly higher, with the 10-year U.S. Treasury yield finishing around 4.18% while the 10-year GoC yield rose to 3.42%.*
   
• U.S. small-business optimism improves in November – The U.S. NFIB Small Business Index rose to 99 in November, a modest improvement from the prior month and slightly above the 30-year average of 98.* Encouragingly, the percentage of small businesses planning to increase employment climbed to 19% for the month—a four-point increase from October and the highest level since December 2024.* This strong employment reading points to underlying stability in the U.S. labour market, in our view, and contrasts with the ADP employment report for November, which showed small businesses shedding over 100,000 jobs.* Additionally, the percentage of small businesses expecting inflation-adjusted sales to rise over the next three months increased to 15%, the highest since January.* We expect U.S. labour-market conditions to remain stable despite slowing job growth, which should help support healthy economic activity over the coming year, with U.S. real GDP growth settling around 2% in 2026, in our view.*
   
• Loonie weakness has provided support to overseas returns in 2025 – A softer loonie relative to developed overseas currencies, such as the euro and British pound, has helped provide a boost to overseas stock returns for Canadian investors in 2025. In local currency terms, the MSCI EAFE Index has posted a healthy 19% gain, but in Canadian dollar terms, the index has gained 24%.* In our view, 2026 could be another year of loonie softness relative to overseas currencies. With the European Central Bank likely at the end of its easing cycle and economic activity appearing to improve in Europe, we see limited scope for yields to decline there. Additionally, the Bank of Japan is expected to continue raising its policy rate into 2026.* Taken together, overseas yields could rise relative to those in Canada, potentially putting downward pressure on the loonie and helping reinforce the case for maintaining a globally diversified portfolio.*

Brock Weimer, CFA;
Investment Strategy

^{Source: *FactSet} 

Monday, 12/8/2025 p.m.

• Stocks trade lower to start the week – North American equity markets closed lower on Monday as investors await the final Bank of Canada and FOMC meetings for 2025 later this week. Leadership was narrow, with technology the only sector of the S&P 500 to finish the day higher, supported by strength in Broadcom shares after reports surfaced that the company is in talks to supply semiconductor chips to Microsoft.* U.S. small-cap stocks were another outperformer, with the Russell 2000 Index edging out a modest gain and now up nearly 4% over the past month.* Overseas, markets in Asia were mixed overnight, while European markets traded mostly lower despite an improvement in the eurozone Sentix economic index.* Bond yields ended the day slightly higher, with the 10-year U.S. Treasury yield climbing to around 4.17%, while the 10-year GoC yield rose to 3.4%.*
   
• Monetary policy in focus – Monetary policy will likely be in focus for investors this week, with the final Bank of Canada and FOMC meetings for 2025 concluding on Wednesday. Signs of weakness in the U.S. labour-market from last week's ADP employment report have led bond markets to price in a near 90% probability of an interest-rate cut at Wednesday's meeting, which would bring the fed funds target range down to 3.5% - 3.75%.* With an interest-rate cut at Wednesday's meeting largely expected, investor attention will likely center on the Fed's economic projections for the coming years.* With inflation still running above its 2% target, we expect the Fed to signal a cautious approach to easing in 2026. Our base-case scenario calls for an additional one or two interest-rate cuts in 2026, which we think should help provide a modest boost to U.S. economic activity throughout the year. On the domestic front, last week's stronger-than-expected employment gains will likely reinforce a hold from the BoC on Wednesday, in our view. With the current target rate of 2.25% at the lower end of the BoC's estimated neutral range, we expect the bank to remain on hold over the coming months.
   
• December a historically strong month for stocks – Historically, December has been a favourable month for equity markets, with the S&P 500 gaining 1.4% on average since 1950 compared with an average monthly gain of roughly 0.8% for all months.** Additionally, returns have been positive in roughly 73% of Decembers over this time.** In particular, the final five trading days of December, along with the first two trading days of the New Year, have historically been strong periods for stocks, with some referring to this period as the Santa Claus rally window. Over these seven trading days, the average S&P 500 return has been 0.9% since 1980, with returns positive about 73% of the time.** While there's no guarantee investors will be gifted with a Santa Claus rally this year, history suggests that equity markets could have further room to run as we approach year-end, in our view.   
   

Brock Weimer, CFA;
Investment Strategy

^{Source: *FactSet **FactSet, Edward Jones} 

Friday, 12/5/2025 p.m.

• TSX pulls back as yields rise – Canadian stocks dropped from record highs as government bond yields and the loonie jumped after the sizable beat in job gains for November*. In the U.S. major equity indexes were little changed today but eked out a modest weekly gain to kick off December*. Investors digested the delayed September data on consumer spending and the Fed’s preferred inflation gauge which came in largely as expected. Optimism around a potential Fed rate cut next week continues to support sentiment, alongside a rebound in technology and AI stocks. On the corporate front, Netflix announced a $72 billion cash-and-stock deal to acquire Warner Brothers, though the transaction is expected to face significant regulatory scrutiny. Shares of Netflix dropped 3%, while Warner Brothers shares finished up more than 5% on the news*.
   
• Canada employment surprises to the upside, reinforcing BoC pause - The Canadian economy added 53,600 jobs in November, a sharp upside surprise compared to expectations for a loss of 2,500 jobs. Most of the increase came from part-time positions, while the healthcare sector accounted for the bulk of gains, adding 46,000 jobs*. The unemployment rate fell to 6.5% from 6.9%, marking its lowest level in over a year*. Combined with stronger-than-expected Q3 GDP growth of 2.6%, today’s data reinforces expectations that the Bank of Canada will hold rates steady at 2.25% next week, the lower end of its neutral range. Bond markets are taking this further, now nearly pricing in one rate hike by the end of 2026. We expect the BoC to remain on hold, particularly given uncertainty surrounding USMCA negotiations and broader economic risks in the months ahead.
   
• All eyes on the Fed next week - Next Wednesday brings the Fed’s policy decision, one that has sparked intense debate, reflected in wide swings in rate expectations and mixed messages from Fed officials. Following recent comments from Fed Governor Williams, bond markets now price in a 95% probability of a rate cut, up from just 30% a couple of weeks ago*. With October and November jobs reports delayed until December 16 due to the government shutdown, the Fed faces a more uncertain backdrop and will likely lean on private data to gauge labor market health. The modest decline in ADP private payrolls for November may push the Fed to cut rates to 3.50%–3.75% next week, in our view. However, we expect the Fed’s projections for 2026 to signal caution on further easing. Our base case calls for one or two additional cuts in 2026 before the Fed concludes its easing cycle.
   

Angelo Kourkafas, CFA;
Investment Strategy

^{Source: *Bloomberg}

Thursday, 12/4/2025 p.m.

• Markets close higher on new labour-market data – The TSX and U.S. equity markets finished higher on Thursday, with industrial and technology stocks leading gains*. Bond yields rose, with the 10-year Government of Canada yield at 3.22% and the 10-year U.S. Treasury yield at 4.10%* In international markets, Europe advanced as eurozone retail sales for October rose 1.5% year-over-year, beating forecasts of 1.0% growth*. The U.S. dollar strengthened against major currencies. In commodity markets, WTI oil traded higher, after U.S.-Russia talks did not result in a breakthrough toward to a peace deal*.
   
• Jobless claims, layoffs lower than expected – U.S. initial jobless claims dipped to 191,000 in a holiday-shortened week, below estimates of 221,000*. Continuing claims, which measure the total number of people receiving benefits, were little changed at 1.94 million, also lower than forecasts to tick up to 1.95 million*. Challenger, Gray & Christmas reported layoffs dropped to 71,000 in November, down from 153,000 in October*. We believe this data suggests the labour market is cooling but not collapsing. The unemployment rate remains modest at 4.4%, while job openings at 7.2 million have dipped below unemployment of 7.6 million*. In our view, wage gains should continue to outpace inflation, providing positive real wages to support consumer spending and the broader economy.
   
• Fed's preferred inflation gauge expected to be mixed – U.S. personal consumption expenditure (PCE) inflation for September will be released tomorrow, delayed by the government shutdown. The headline figure is expected to edge up to 2.8%, from 2.7% the prior month*. Core PCE, which excludes more-volatile food and energy prices, is forecast to tick down to 2.8%, from 2.9% in August*. While PCE inflation remains above the Fed's 2% target, we believe the central bank is on track to ease again next week to help support the softening labour market. Bond markets are pricing in an 87% chance of a rate cut this month, likely followed by another two cuts next year*. We expect inflation to moderate next year, as a slowdown in home prices** and rents*** likely feeds through to the shelter component, in our view, likely enabling the Fed to continue its easing cycle, though at a slower pace.
   

Brian Therien, CFA;
Investment Strategy

^{Source: *FactSet ** S&P national home price index *** Zillow Observed Rent Index}